The financial sector started the earnings season
The earnings season has officially begun, and the focus this past week has been on the US banking and financial sector. Many major banks, including JPMorgan Chase, Citigroup, Wells Fargo, BlackRock, Morgan Stanley and Goldman Sachs, released their results, giving the first guidance for the entire earnings season.
Banks started the earnings season reasonably strongly
The banks' results were mostly in line with expectations or slightly better.
However, economic uncertainty was raised, especially geopolitics, tariffs and inflation.
Another significant piece of news from the financial sector is JPMorgan Chase’s announcement that they will launch a $1.5 trillion “Security and Resiliency Initiative” over a 10-year period. The program aims to support critical industries and strengthen economic resilience. The news mentions developments in infrastructure, supply chain, energy, and technology sectors, for example.
XLF, (in USD), 5-year daily chart
RUSSELL 2000, (in USD), 1-year daily chart
RUSSELL 2000 (in USD), 5-year weekly chart
The financial sector's performance was particularly visible in the Russell 2000 index, where banks have a significant weighting. The index reached a new All Time High, (‘ATH’), readings and has clearly outperformed the S&P500 and NASDAQ indices since the start of the earnings season.
The price has remained within the channel drawn on the chart and is clearly above the SMA50 and 200-Day Simple Moving Average (‘SMA200’) moving averages. However, if the price breaks the lower end of the channel and the SMA50 moving average, the technical picture would become weaker.
The focus shifts to the following sectors
This week and the coming weeks, the earnings season will accelerate even more, as technology companies, industrials and the consumer sector take their turn. Investors are particularly interested in technology and MAG7 companies. Among the larger companies that can be mentioned this week are Tesla and Netflix, which will certainly receive a lot of attention. Tesla will publish its third-quarter results on October 22 after the US market closes.
Reports from industrial companies also provide valuable information on the state of global demand and the situation of supply chains.
The results of the consumer sector, on the other hand, provide indications of how strong purchasing power and confidence in the economy have remained.
Tesla, (in USD), 1-year daily chart
Tesla, (in USD), 5-year weekly chart
Current market sentiment
The markets are in a somewhat uncertain situation since the start of the earnings season. The price fluctuations of the previous weeks have shown that negative news or topics can cause significant declines in the markets. This was seen very clearly on Friday, October 10, when the trade war between the United States and China intensified.
Uncertainty is also being caused by the US government shutdown, which has not yet been agreed upon at the time of writing. As a result, no relevant macro data has been released from the US for the time being, which is bringing uncertainty to the markets. If macro data were released normally and were strong, it could calm the markets somewhat.
The earnings season has started off solidly, but the biggest excitement is yet to come. The first reports give a positive signal, but in the coming weeks will show whether the strong momentum continues in other industries.
S&P500, (in USD), one-year daily chart 1-year daily chart
S&P500, (in USD), 5-year weekly chart
The S&P500 index has seen a clear downward movement, and the downward movement seen on Friday, October 10th was the largest since April 2025.
The price is still within the channel drawn on the chart, the lower end of which could act as a potential support. The 50-Day Simple Moving Average (‘SMA50’) moving average is also at the same level. If this level is broken clearly downwards, the technical picture of the index would become clearly weaker.
Compared to the previously viewed RUSSELL 2000 index, the weaker performance of the S&P500 index since the earnings season has begun is more clearly noticeable. The price has also moved more towards the lower end of the channel, which may increase the probability of a breakout of the level.
In the current, uncertain market climate, it may be a good idea to consider, for example, possible portfolio hedging, unless market uncertainties are clarified.
Summary
The earnings season has started off solidly, with the financial sector in particular making a positive start. However, markets remain uncertain due to geopolitical tensions and domestic political challenges in the United States.
The coming weeks will show on the earnings side whether the positive momentum will continue in other sectors or whether the market will find a new direction as the earnings season progresses.
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Indicators shown on the graphs:
● Simple Moving Average, 50, blue
● Simple Moving Average, 200, red
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